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EXHIBIT 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated December 11, 1997 (this "Agreement"), by and
among Voith Sulzer Paper Technology North America Inc., a Delaware corporation
("Parent"), Voith Sulzer Acquisition Corp., a California corporation and a
wholly-owned subsidiary of Parent (the "Purchaser"), and Impact Systems, Inc., a
California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and the Company are entering into an Agreement and Plan of
Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Merger Agreement), which
provides, upon the terms and subject to the conditions thereof, for (i) the
commencement by the Purchaser of a tender offer (the "Offer") to purchase all of
the issued and outstanding shares of the common stock, no par value, of the
Company ("Common Stock") at the applicable Offer Price and (ii) the subsequent
merger of the Purchaser with and into the Company (the "Merger"), whereby each
share of Common Stock, other than shares owned directly or indirectly by Parent,
the Purchaser or the Company and other than Dissenting Shares, will be converted
into the right to receive in cash the Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of Parent and the Purchaser to
enter into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and in order to induce Parent and the Purchaser to enter into the
Merger Agreement, the Company has agreed, to grant the Purchaser an option to
purchase shares of Common Stock, upon the terms and subject to the conditions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE TOP-UP STOCK OPTION
SECTION 1.1. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to the Purchaser an
irrevocable option (the "Top-Up Stock Option") to purchase that number of shares
of Common Stock (the "Top-Up Option Shares") equal to the number of shares of
Common Stock that, when added to the number of shares of Common Stock owned by
the Purchaser and its affiliates immediately following consummation of the
Offer, shall constitute 90% of the shares of Common Stock then outstanding on a
fully diluted basis (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
shares of Common Stock subject thereto exceeds the number of authorized shares
of Common Stock available for issuance. The Company agrees to provide Parent and
the Purchaser with information regarding the number of shares of Common Stock
available for issuance on an ongoing basis.
SECTION 1.2. Exercise of Top-Up Stock Option. (a) Subject to the conditions
set forth in Section 2.1 and any additional requirements of Law, the Top-Up
Stock Option may be exercised by the Purchaser, in whole but not in part, at any
one time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
upon the Purchaser's acceptance for payment pursuant to the Offer of shares of
Common Stock constituting more than 50% but less than 90% of the shares of
Common Stock then outstanding on a fully diluted basis.
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(c) Except as provided in the last sentence of this Section 1.2.(c), the
"Top-Up Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of:
(i) the Effective Time;
(ii) the date which is ten (10) business days after the occurrence of
Top-Up Exercise Event; and
(iii) the termination of the Merger Agreement.
Notwithstanding the occurrence of the Top-Up Termination Date, the Purchaser
shall be entitled to purchase the Top-Up Option Shares if it has exercised the
Top-Up Stock Option in accordance with the terms hereof prior to such
occurrence, and the occurrence of the Top-Up Termination Date shall not affect
any rights hereunder which by their terms do not terminate or expire prior to or
as of such date.
(d) In the event the Purchaser wishes to exercise the Top-Up Stock Option,
the Purchaser shall send to the Company a written notice (a "Top-Up Exercise
Notice", the date of which notice is referred to herein as the "Top-Up Notice
Date") specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which the Purchaser wishes to receive, the
place for the closing of the purchase and sale pursuant to the Top-Up Stock
Option (the "Top-Up Closing") and a date not earlier then three (3) business
days nor later then ten (10) business days from the Top-Up Notice Date for the
Top-Up Closing (the "Top-Up Closing Date"); provided, however, that (i) if the
Top-Up Closing cannot be consummated by reason of any applicable Laws or Orders,
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated and (ii) without limiting the foregoing, if prior notification
to or approval of any Governmental Entity is required in connection with such
purchase, the Purchaser and the Company shall promptly file the required notice
or application for approval and shall cooperate in the expeditious filing of
such notice or application, and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (A) any required notification period has expired or been terminated or
(B) any required approval has been obtained, and in either event, any requisite
waiting period has expired or been terminated. The Company shall, within two (2)
business days after receipt of the Top-Up Exercise Notice, deliver written
notice to the Purchaser specifying the number of Top-Up Option Shares and the
aggregate purchase price therefor.
ARTICLE II
CLOSING
SECTION 2.1. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) All waiting periods, if any, under the HSR Act applicable to the
issuance of the Top-Up Option Shares hereunder shall have expired or have been
terminated and the conditions under any other applicable Antitrust Laws shall
have been satisfied; and
(b) There shall be no preliminary or permanent injunction or other final,
non-appealable judgment by a court of competent jurisdiction preventing or
prohibiting the exercise of the Top-Up Stock Option or the delivery of the
Top-Up Option Shares in respect of such exercise.
SECTION 2.2. Closing. (a) At the Top-Up Closing, (i) the Company shall
deliver to the Purchaser a certificate or certificates evidencing the applicable
number of Top-Up Option Shares (in the denominations specified in the Top-Up
Exercise Notice), and (ii) the Purchaser shall purchase each Top-Up Option Share
from the Company at the Top-Up Price. Payment by the Purchaser of the Top-Up
Price for the Top-Up Option Shares shall be made by wire transfer of immediately
available funds to an account designated by the Company.
(b) The Company shall pay all expenses, and any and all Federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2.2.
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(c) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), or any other sale
as a result of which such legend is no longer required.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
(except as otherwise disclosed in writing on the date hereof) as follows:
SECTION 3.1. Organization; Authority Relative to this Agreement. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due and valid authorization, execution and delivery by
Parent and the Purchaser, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and by general equitable principles.
SECTION 3.2. Authority to Issue Shares. The Company has taken all necessary
corporate action to authorize and reserve and permit it to issue, and at all
times from the date hereof through the Top-Up Termination Date shall have
reserved, all the Top-Up Option Shares issuable pursuant to this Agreement. All
of the shares of Common Stock issuable under the Top-Up Stock Option, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable, will be delivered
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Purchaser's voting
rights, charges, adverse rights and other encumbrances of any nature whatsoever
(other than this Agreement) and will not be subject to any preemptive rights.
SECTION 3.3. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by the Company does not, and the performance by
the Company of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
articles of incorporation or bylaws or equivalent organizational documents of
the Company or any of the Subsidiaries, (ii) assuming that all Consents and
filings described in Section 3.3(b) have been obtained or made, conflict with or
violate any Law applicable to the Company or the Subsidiaries or by which any
property or asset of the Company or the Subsidiaries is bound or affected or
(iii) result in any Violation pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Entity is required by
the Company in connection with the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder or the consummation by
the Company of the transactions contemplated hereby, except for
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(i) compliance with the HSR Act and any requirements of any other Antitrust Laws
and (ii) Consents or filings the failure of which to be obtained or made would
not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by the
Company of any of its obligations hereunder.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Further Action. The Company shall use its best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective the transactions contemplated hereunder,
including, without limitation, using all reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby represent and warrant to the Company as
follows:
SECTION 5.1. Organization; Authority Relative to this Agreement. Each of
Parent and the Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
of Parent and the Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and the
Purchaser. This Agreement has been duly and validly executed and delivered by
Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of Parent and the Purchaser, enforceable against each of Parent and
the Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and by general
equitable principles.
SECTION 5.2. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Parent and the Purchaser do not, and the
performance by Parent and the Purchaser of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the articles of incorporation or bylaws or equivalent organizational
documents of Parent or the Purchaser, (ii) assuming that all Consents and
filings described in Section 5.2(b) have been obtained or made, conflict with or
violate any Law applicable to Parent or the Purchaser or by which any property
or asset of Parent or the Purchaser is bound or affected or (iii) result in any
Violation pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or the Purchaser is a party or by which Parent or the Purchaser or any of
their respective properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Entity is required by
Parent or the Purchaser in connection with the execution and delivery of this
Agreement, the performance by Parent or the Purchaser of any of its obligations
hereunder or the consummation by Parent or the Purchaser of the transactions
contemplated hereby, except for (i) compliance with the HSR Act and any
requirements of any other Antitrust Laws and (ii) Consents or filings the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby or the performance by Parent or the Purchaser of any of
their respective obligations hereunder.
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ARTICLE VI
COVENANTS OF THE PURCHASER
SECTION 6.1. Distribution. The Purchaser shall acquire the Top-Up Option
Shares for investment purposes only (and, only for the purpose of effecting a
short-form merger with the Company) and not with a view to any distribution
thereof in violation of the Securities Act.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 7.2. Waiver. Any party hereto may (a) extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto or (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
SECTION 7.3. Fees and Expenses. Except as otherwise provided herein or in
Section 8.03 of the Merger Agreement, all costs, fees and expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses.
SECTION 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.04 of the Merger Agreement.
SECTION 7.5. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner to
the fullest extent permitted by applicable Law in order that the transactions
contemplated hereby may be consummated as originally contemplated to the fullest
extent possible.
SECTION 7.6. Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties, except that the
Purchaser may assign, in its discretion, any or all of its rights, interests and
obligations hereunder to Parent or any direct or indirect subsidiary of Parent,
but no such assignment shall relieve the Purchaser of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 7.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to the principles of conflicts of laws thereof.
SECTION 7.8. ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD
OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
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OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF
THE UNITED STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO
ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 7.9. Headings. The descriptive headings contained in this Agreement
are included for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
SECTION 7.11. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. XXX XXXX
------------------------------------
Name: R. Xxx Xxxx
Title: Executive Vice President
By: /s/ XXXX XXXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. XXX XXXX
------------------------------------
Name: R. Xxx Xxxx
Title: President
By: /s/ XXXX XXXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
IMPACT SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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